Frederick man pleads guilty to federal mail fraud

Faces 20 years in prison after his company cheated clients out of $629K

A Frederick man pleaded guilty Tuesday in U.S. District Court in Baltimore to conspiracy to commit mail and wire fraud, cheating clients of his company out of more than $628,500, according to the U.S. Attorney’s Office in Baltimore.

Stephen Lane Reid, 50, was vice president and part-owner of RMS Direct Inc., a mail preparation business in Frederick with more than 200 clients and revenues of more than $5 million per year.

Reid owned 35 percent of the company while a man identified as the company president, but described only by the initials C.B. in Reid’s plea agreement signed March 12, owned 65 percent.

RMS Direct President Chester William Bigelow was charged March 20 with conspiracy to commit mail and wire fraud, and is scheduled for arraignment later this month, according to court records.

Reid faces a maximum sentence of 20 years in federal prison and a fine of $250,000. He also will be required to forfeit $628,581. His sentencing is scheduled for July 12.

His attorney, Gerald P. Martin of the Baltimore law firm of Rosenberg, Martin, Greenberg, declined to comment. Bigelow’s attorney, Joseph Murtha, said it would be inappropriate for him to comment at this time.

Under his plea agreement, Reid and his company had contracts to prepare large-volume mailings such as pamphlets and brochures to send out for primarily nonprofit corporations for fundraising.

Instead, beginning in 2005, Reid and the man identified as C.B. sent clients falsified statements that the materials had been mailed out when some of them had not been, according to court documents.

Reid would collect payment from them for work that had not been performed, the documents said.

All told, at least 19 clients lost a total of $628,581, federal prosecutors said.

Among the victims were organizations such as the National Wildlife Federation headquartered in Reston, Va., which was defrauded out of $78,502; the Special Olympics, headquartered in Washington, D.C., $10,704; and the Disabled American Veterans, $7,975.

“In addition to defrauding postal customers, this scheme jeopardized the reputation of the U.S. Postal Service with its customers,” Gary Barksdale, inspector in charge of the U.S. Postal Inspection Service’s Washington Division, said in an emailed statement.

As part of the scheme, Reid and some of the RMS employees generated false postage statements, forged the signature of the U.S. Postal Service’s acceptance clerk and created a false impression of the special postal service date stamp used on the postage statement, according to court documents.

In 2006, RMS workers made an unauthorized copy of the postal clerk’s key to the filing cabinet where the official date stamp was kept and then began using it, court documents said.

After the postal service moved to a computer-generated mailing transaction receipt, Reid and a co-conspirator forged a document that looked identical to it to show the clients as proof that the work was done, according to the federal prosecutor’s statement.

To hide the scheme, RMS clients often included pieces of mail known as “seeds,” in the mailings they provided to RMS which were sent to particular individuals or addresses so that the client could track the timing and appearance of the mailings, prosecutors said.